Does property tax make sense?

Does property tax make sense?

In Brief: Property values are an archaic way to determine a tax bill, AIMS Executive Vice President Charles Cirtwill tells the Times & Transcript. He says municipal taxes should not be tied to the value of your home at all, but rather to the services you consume.

FREDERICTON – The complaints aren’t new: homeowners, who have lived in the same property for years, are facing staggeringly high tax bills.

Although some homeowners have only made a few, if any, renovations, the growth in their hometowns is causing them to pay more to the taxman each year.

“We designed municipal property taxation when the value of your home was a reflection of your ability to pay. Increasingly, that’s no longer the case — particularly when you look at retirees who are living in communities that have grown up around them,” said Charles Cirtwill of the Atlantic Institute for Market Studies.

“It shouldn’t be tied to the value of your home at all.”

Homes are assessed for 100 per cent of their true market value. A municipality’s tax rate is then charged per $100 of assessed value. That means a Moncton resident with a home worth $100,000 pays roughly $1,652 in tax.

But Cirtwill argues an individual’s home is an archaic way to determine a tax bill. Instead, a resident should be taxed based on the services they consume, he said.

“It allows for a clearer differentiate between specific user fees and services that really are a benefit to everybody,” he said.

The existing structure allows municipalities to collect more money without raising their tax rates.

Changing the structure would allow residents to see the true cost of services, require municipalities to be more accountable and allow municipalities to more easily determine who can’t afford to pay for particular services, said Cirtwill.

“It allows for more transparency in the subsidization of services for low-income or people facing other challenges,” he said.

“Instead of telling us the reason we’re paying such high taxes is to be nice to everybody, they can actually demonstrate it.”

Following petitions from angry homeowners questioning skyrocketing tax bills, the provincial government appointed Jean-Guy Finn to study the issue of local governance, including property tax.

He will submit a report to government this fall.

But the issue is already causing some debate at meetings being held by a legislative committee examining government’s recent discussion paper on taxation.

Although property tax is discussed only briefly in the document, municipalities have expressed concern over proposals that would cap how much money they could receive through property assessments.

“The assessment is the value of your property and taxation is what you need to pay for services. They should be disconnected completely,” he said.

“If it were my own way of doing it I would say (municipalities) should probably get each and every year the inflation rate and anything over you should probably go back to your people who you represent and say this is the reason why we need more,” he added.

A spokesman for Service New Brunswick, which oversees property assessments, said the minister is waiting until the report on local governance is finalized before commenting.